HMRCs Crackdown on Fast Food outlets by 31st January 2025

HMRC is cracking down on tax evasion involving online platforms like Deliveroo, Just Eat, Foodhub, and Uber Eats, targeting fast food businesses and individuals suspected of underreporting their sales turnover.

With the first reports under new digital platform rules due by 31st January 2025, businesses and self-employed individuals have a critical window to get their records in order.

Whether you’re a food trader, work as a delivery rider, or earn income through platforms like Airbnb or Etsy, understanding these changes is essential to avoid fines, persecution, and penalties.

---

(Read Time: Approx. 4 minutes)

Topics Discussed:

• What till fraud entails and why HMRC is targeting businesses using it.
• The steps businesses should take if under investigation to avoid harsh penalties.

---

---

HMRC Targets Digital Platforms and Tax Evasion

As part of its efforts to combat tax avoidance, HMRC has introduced strict new reporting rules for online platforms, in fast food and other industries.

Platforms like Deliveroo, Uber, Airbnb, and Etsy are now required to collect detailed seller information, including bank details, for both businesses and individuals.

These changes, effective from 1st January 2024, aim to identify discrepancies in income reporting, targeting freelance workers, side hustlers, and the self-employed alongside established businesses.

The first reports under these new rules due by 31st January 2025, meaning businesses and self-employed individuals have a critical window to get their records in order.

This data-sharing initiative doesn’t stop at UK borders.

HMRC can now access international platform data to uncover offshore income, allowing it to act against tax evasion quickly and efficiently.

With over 4,000 traders already flagged for suspected underreporting, and 500 tax agents notified, businesses operating through platforms like Just Eat or Foodhub are under heavy scrutiny.

---

What is Electronic Sales Suppression (ESS)?

Electronic Sales Suppression (ESS) is tax evasion where businesses use tools to manipulate sales data.

These tools, including software and devices, allow businesses to delete transactions or reduce reported sales figures, effectively hiding taxable income.

This fraudulent activity impacts VAT, corporation tax, and income tax filings, with serious consequences:

• Fines of up to £50,000 per offence.
• Personal liability for directors and business owners.
• Criminal prosecution for both users and suppliers of ESS tools.

ESS doesn’t just affect VAT—it often leads to broader investigations into corporation tax and income tax compliance, making it a critical focus for HMRC.

---

How HMRC is Cracking Down on Fast Food

HMRC’s multi-faceted approach to tackling these tax evasion methods includes:

• Data Matching
  HMRC compares declared sales with data from card payment providers, bank statements, and online fast food platforms such as Just Eat and Deliveroo. Any inconsistencies between reported and actual sales can trigger an investigation.

• Unannounced Inspections
  Over the past year, HMRC has raided numerous takeaways and restaurants, targeting businesses in cities like London, Manchester, and Newcastle. In addition to seizing records, these visits have led to arrests and criminal inquiries.

• Agent Letters
  HMRC has issued thousands of letters to tax agents representing businesses suspected of underreporting sales. These letters urge agents to ensure their clients’ tax records are accurate.

• Public Enforcement
  By publicising raids and penalties, HMRC aims to deter others from engaging in ESS practices.

---

What to Do If You’re Affected

If you’ve been contacted by HMRC or suspect your business may be at risk, take the following steps:

• Don’t Ignore HMRC’s Correspondence
  If you’ve received a letter or notice, take it seriously. Ignoring HMRC can escalate the issue, leading to higher penalties and possibly criminal charges.

• Review and Rectify Records
  Begin by thoroughly examining your sales data, especially from EPOS systems and online platforms. Ensure all sales and commissions are accounted for in your tax returns.

• Seek Expert Guidance
  Engaging with HMRC alone can be risky. Tax professionals, such as Tax Expert, can provide expert support by:
  • Analysing your records for discrepancies.
  • Acting as your representative in HMRC communications.
  • Ensuring compliance to minimise penalties.

• Voluntary Disclosure
  If irregularities are identified, consider using HMRC’s disclosure facility to report them. While penalties may still apply, voluntary transparency often results in more lenient treatment.

• Cooperate Fully
  Demonstrate a willingness to cooperate by responding to HMRC’s requests promptly. Providing complete documentation and being transparent can positively influence the investigation’s outcome.

• Implement Compliance Measures
  • Regularly audit your sales records.
  • Update POS systems to prevent manipulation.
  • Train staff to adhere to proper record-keeping practices.

• Prepare for Future Inspections
  Keep documentation such as menus, sales receipts, and delivery platform statements readily available. A cooperative and transparent approach can help during audits or inspections.

---

Summary

HMRC’s crackdown on online fast food platforms like Just Eat, Deliveroo, and Foodhub underscores the urgency of maintaining accurate tax records.

With new reporting rules and intensified enforcement, businesses and individuals must act quickly to avoid penalties.

If your business is under investigation or you suspect irregularities in your records, act now.

Contact us at Ilyas Patel Accountants for professional guidance.

Fill out our form here for any questions, give us a call at 01772 920579, or message us on our WhatsApp for out of office hours.

---

Kind regards,

Ilyas Patel